Core Viewpoint - In the context of a weak recovery in the consumer industry, Yili Group (600887.SH) has demonstrated resilience and growth, achieving a revenue of 115.78 billion yuan in 2024, maintaining its position as the leading dairy company in Asia, with a net profit of 11.539 billion yuan, reflecting a year-on-year growth of 12.2% [1][3]. Financial Performance - Yili's overall revenue for 2024 reached 115.78 billion yuan, with a gross margin increase of 131 basis points to 34.03%, indicating enhanced profitability [3]. - The operating cash flow net amount was 21.74 billion yuan, showing an 18.9% year-on-year increase, indicating strong cash flow [3]. - The liquid milk segment generated 75 billion yuan in revenue, maintaining the highest market share in the industry [3]. Business Segments - The milk powder and dairy products segment achieved a record revenue of 29.675 billion yuan, growing by 7.53% year-on-year, with "Golden Crown" infant formula experiencing double-digit growth [3]. - The ice cream business generated 8.721 billion yuan, maintaining the top position in both revenue and market share for 30 consecutive years [4]. - New product revenue accounted for over 15% of total revenue in 2024, with innovative products like "Yogurt with Lemon" and lactose-free options driving growth [4]. Market Outlook - Yili believes the most challenging times for the industry are over, with a healthy recovery in the distribution channels observed by early 2024 [6]. - The company anticipates a gradual recovery in the consumer goods sector, supported by government policies aimed at boosting consumption and health [6][7]. - Yili's strategic focus for 2025 includes maintaining a profit margin target of 9% and preparing for potential industry recovery [7]. Strategic Initiatives - Yili is set to launch a new five-year strategic cycle, focusing on a comprehensive production system that includes "Chinese Cattle, Chinese Breeding Models, Chinese Raw Materials, Chinese Equipment, and Chinese Quality" [1][11]. - The company plans to enhance its functional dairy product offerings, targeting the growing demand for health-oriented products in the market [9][10]. - Yili's collaboration with Tongrentang aims to explore functional food products, marking a significant step towards becoming a health food group [10]. Future Growth Potential - The domestic dairy market still has significant growth potential, particularly in lower-tier cities where consumption is on the rise [9]. - Yili aims to capitalize on the underdeveloped functional dairy product market, with plans to increase investment in this area starting in 2025 [9][10]. - The establishment of a national dairy technology innovation center will enhance Yili's capabilities in cheese production and improve the domestic supply chain [10][11].

Core Insights - The company achieved a total revenue of 115.78 billion yuan in 2024, maintaining its position as the leading dairy company in Asia [1] - The net profit, excluding goodwill impairment, was 11.539 billion yuan, representing a year-on-year growth of 12.2% [1] - The net cash flow from operating activities reached 21.74 billion yuan, an increase of 18.86% compared to the previous year [1] Industry Overview - The dairy consumption demand faced some suppression due to economic slowdown, low consumer confidence, and short-term imbalances in raw milk supply and demand [1] - Despite these challenges, dairy products are considered essential consumer goods, indicating a degree of inelastic demand [1] - The industry is expected to experience healthier and more sustainable development as raw milk supply and demand return to balance [1] Company Operations - The company is engaged in the production and sales of various dairy products and health drinks, including liquid milk, milk beverages, milk powder, yogurt, frozen drinks, cheese, and packaged drinking water [1] - The company holds the leading market share in liquid dairy products and adult milk powder, as well as maintaining its position as the top player in the ice cream market for 30 consecutive years [1] Innovation and R&D - The company adheres to the principle of "Yili means quality," focusing on consumer-centric approaches, accelerating technological and product innovation, and optimizing its business portfolio [2] - In 2024, the company's R&D expenditure was 870 million yuan, the highest among listed companies in the dairy industry [2] - The company continuously launches new products based on consumer demand, with new product revenue accounting for 15.1% of total revenue [5] Technological Advancements - The company initiated an AI application platform for breast milk research to enhance formula development efficiency and accelerate product iteration [5] - The deployment of generative AI capabilities includes the creation of the dairy industry's first large model product, YILI-GPT, and the establishment of a new intelligent platform, YILI-Agent, to support intelligent operations and innovation breakthroughs [5] Profit Distribution - The company announced a profit distribution plan, proposing a cash dividend of 1.22 yuan per share (including tax), with a total proposed cash dividend amounting to 7.726 billion yuan, representing 91.4% of the net profit for the period [5]